Big loans bog down govt banks

Update:

It seems as if the government banks have been leased out to the big borrowers. In fact, over 50 per cent of the banks’ outstanding loans are in the hands the top 20 loan defaulters. Yet the rules are being repeatedly manipulated to provide them with loans all over again.

Various banks have readjusted loans totaling Taka 15,218 crore of 11 companies. Prior to this, the banks rescheduled loans amounting to about Taka 25,000 crore due to political unrest. Is it the duty of the government banks to facilitate the big loan defaulters?

Excess liquidity and default loans are a matter of concern for the banking sector. Repeatedly using public funds for the benefit of the loan defaulters is seriously harmful to the economy. Having over 10 per cent loans in default is an ominous sign. But even Bangladesh Bank indulges the defaulters.

Alarming statistics loom large on the banking front. Up till December 2016, the default loans of all banks totaled Taka 62,172 crore. Over half of the default loans, 51.76 per cent to be precise, lies with five state-owned banks.

The rate of default loans of foreign banks in Bangladesh is less than one per cent, while that of government banks in the same circumstance exceeds 25 per cent. Bangladesh Bank simply facilitates public funds to be poured into this bottomless chasm of the state-owned banks.

Political appointment of directors to the government banks is one of the factors responsible for the situation. Government lobbying and use of power is also to blame for these bad loans. The finance minister may come up with excuses and explanations, but the situation has not improved. Repeatedly making the same mistakes will not resolve the problems. The reins must be pulled in.

Funds from Bangladesh Bank have been channeled overseas through fraudulent means. Massive sums of money have also been pilfered with the indulgence of the central bank. When will Bangladesh Bank come to its senses?

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